NEW YORK — Treasuries fell, with the difference in yields between two- and 10-year notes at its widest since October 2003, after a surge in confidence among U.S. consumers fueled speculation the economy will recover this year.
Longer-maturity debt led the declines after the Conference Board’s sentiment index surged to 54.9 in May, higher than forecast and the biggest gain since April 2003. The so-called yield curve widened to 2.629 percentage points, the most since it touched 2.659 on Oct. 14, 2003.
The Treasury’s record-tying $40 billion sale of two-year notes drew the most demand since November 2006 from a group of investors that includes foreign central banks. The auction was the first of three this week that will raise $101 billion.
“Consumer confidence was a bit of a surprise,” said Dan Mulholland, a Treasury trader in New York at RBC Capital Markets the investment-banking arm of Canada’s biggest bank. “People are a bit more concerned about how we’ll take down the supply.”
The yield on the 10-year note rose nine basis points, or 0.09 percentage point, to 3.55 percent at 4:45 p.m. in New York, according to BGCantor Market Data. The 3.125 percent security due May 2019 fell 3/4, or $7.50 per $1,000 face value, to 96 3/4. Bloomberg News
